Editorial: Public concerns should fuel refinery debate

Vancouver Sun08.22.2012

David Black, owner of Black Press, unveils plans to the media Friday, August 17, 2012 in Vancouver about a oil and gas refinery he proposes to build in Kitimat. The refinery would receive its oil from the proposed Enbridge pipeline, but would negate the need for shipping raw bitumen oil to markets overseas for refining.

B.C. newspaper publisher David Black has changed the debate over Enbridge’s Northern Gateway Pipeline proposal with his plan to build a refinery near Kitimat.

The plan is forcing those opposed to the pipeline to consider what they would support instead of just saying no.

But much of the discussion has bogged down on issues that from a public policy point of view are irrelevant because they relate to the business case rather than the environmental risk-benefit analysis that British Columbians have to make.

Some opponents who view any oil production as a threat to the global climate won’t support anything. They don’t care how many jobs would be produced or what measures are taken to reduce the chance of local pollution. They want oil left in the ground.

Others see the value of energy exports to the Canadian economy, but still see the Enbridge project as too much of a threat to the northern wilderness, so the refinery makes no difference.

For those whose primary concern is the threat of tankers carrying bitumen on our coastal waters, Black’s proposal could make the project more palatable by converting bitumen to refined products that would be much less damaging in the event, no matter how slight, of a spill.

And for those who already support the construction of the line, it should cause them to consider whether the Enbridge proposal as now constituted can gain the support of British Columbians and the approval of the Joint Review Panel or whether it is more likely to be successful with a refinery attached.

While these are important issues from a public policy perspective, much of the discussion since Black released his plan last week has revolved around issues that are essentially irrelevant to the public debate.

The first thing to note is that Black is not seeking public funds for his idea. So far, he is only spending his own money. If he can get the necessary approvals, the $13 billion needed to get a refinery built will still have to come from private investors.

So from a public policy point of view, all of the discussion about whether it is economically feasible to build a refinery in Canada or whether the Chinese are willing to buy refined products instead of crude oil are largely meaningless.

For investors they will be crucial, however. Black’s proposed Kitimat refinery will never be anything more than an interesting idea unless it is able to answer many of the questions now being raised.

To attract investors, he will need a solid business plan.

He will have to have customers for the refinery committed to long-term contracts for an assured revenue flow and he will have to have locked in an adequate supply of bitumen to convert to finished products in the refinery to deliver to those customers.

There are overlaps, of course, between the support Black needs from the public and the business decisions that have to be made. Investors will want to know they aren’t putting money into a project that has no chance of getting the necessary public approvals.

Those start with the local municipalities of Kitimat and Terrace and the first nations that claim the territory on which a refinery would be built, in addition to the provincial and federal governments.

And as Black noted early on, without the Northern Gateway Pipeline there will be no refinery. So Enbridge will have to persuade the Joint Review Panel, first nations and British Columbians that the risk of a spill is inconsequential.

That task will be easier if the tankers needed to complete the link to markets in Asia are perceived as less of a threat. Easier, but still not easy. Black’s refinery is still at the interesting idea stage. Many obstacles lie ahead.

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